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Arisa
14 days ago
6

On December 31, 2019, Spearmint, Inc., issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. After recording the rela

ted entry, Bonds Payable had a balance of $450,000 and Premium on Bonds Payable had a balance of $11,795. Spearmint uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2020. Prepare journal entry for June 30, 2020.
Business
1 answer:
arsen [2.9K]14 days ago
3 0
Cash disbursement to clients: $450,000 multiplied by the contract rate of 9% times 1/2 equals $20,250. Amortization of the premium: $11,795 divided by 6 periods results in $1,966. Bond interest expense is calculated as: $20,250 minus $1,966 equals $18,284.
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